24/7 Wall St. » ALU

Alcatel-Lucent Pulls a Rabbit Out of Its Hat on Earnings (ALU)

Administrator — Fri, 10 Feb 2012 13:13:52 +0000

Alcatel-Lucent S.A. (NYSE: ALU) is surging after earnings. Amazingly enough, the short sellers greatly lightened up in the new data that came out of the NYSE last night. There was a drop of about 40% in the short interest. Alcatel reported adjusted fourth quarter earnings per share of $0.25, which is more than double what the Thomson Reuters consensus estimate of $0.11 EPS. The company is also reorganizing its work force and that will include bringing back outsourced jobs. Another issue is that it will license patents through a third party.

Shares closed at $1.94 on Thursday and the 52-week trading range is $1.39 to $6.63. There is almost 90 minutes left of pre-market trading and we already have close to 4 million shares traded in the pre-market and the stock is surging by almost 15% to $2.23.

After many disappointments, this one feels like it came a bit out of the blue when you consider the woes of Europe and that it is now based in Europe when so many other tech and communications outfits have been reporting bad numbers.

JON C. OGG

Filed under: 24/7 Wall St. Wire, ADR, Earnings, Technology Companies Tagged: ALU

What’s Important in the Financial World (2/10/2012) China’s Imports, Google Home Entertainment

247wallst — Fri, 10 Feb 2012 11:41:11 +0000

China’s imports number fell more than expected, another sign that an economy that grew at 10% or more per year for a decade has moved into a recession of sorts. Exports decreased 0.5% and imports fell 15.3% from a year earlier in January. The overall trade surplus was $27.3 billion. The International Monetary Fund reported last week that its forecast of 8.4% GDP growth in China this year could be much too high. That number could drop by four full points if trouble in Europe grows. And it has. Greece recently said its unemployment rate reached nearly 21%. The number is already higher than than in Spain. Several of the eurozone’s southern countries have admitted that they are in new recessions. China may have begun to import less because it does not need raw materials for its factories and its new middle class is concerned about its economic future.

Still No Greek Deal

The situation with Greece’s debt, which seemed better for a few hours as its leader met with European Union, European Central Bank and IMF officials in Brussels, is bad again. It appeared that those three groups would release the money Greece needs to cover its March obligations so as not to default. But that capital comes with strict restrictions, and the Greeks may be unable to accommodate them. Greece has to show its financiers that planned austerity programs are well underway and that all of the political powers in the country have endorsed them. That broad political endorsement is by no means assured as leaders jockey for the approval of sullen voters who believe austerity measures have gone too far.

Google Home Entertainment

Rumors have started to spread across the tech world that Google (NASDAQ: GOOG) will release a home entertainment system that can stream music throughout people’s homes. The press has speculated that the world’s largest search company believes it can follow Apple (NASDAQ: AAPL) into the hardware business. Apple is widely admired for its ability to marry devices with apps and entertainment. Google has started down the path of hardware integration with it purchase of handset firm Motorola (NYSE: MMI). Google may find the going rough, though. Most hardware companies have very modest margins, or make no money at all, as companies that make products to compete with the iPhone and iPad have already discovered.

Additional Job Cuts

PepsiCo (NYSE: PEP) and Alcatel-Lucent (NYSE: ALU) are the latest multinationals to “reorganize” their businesses for the future. At Alcatel this means a cut of 1,800 people. At Pepsi it means dropping 8,700 workers. These restructurings are presented to investors and the press as ways to drive efficiency and margins. A look below the surface at most companies that take this path reveals that sales have faltered and management needs a way to show investors that they can make even modest returns.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Market Open Tagged: AAPL, ALU, GOOG, PEP

Media Digest (2/10/2012) Reuters, WSJ, NYT, FT

247wallst — Fri, 10 Feb 2012 11:40:34 +0000

The U.S. and state attorneys general reach a $25 billion settlement with five banks over mortgage abuses. (Reuters)

The Hong Kong division of Alibaba may go private as part of a refinancing and a buyback of Yahoo!’s (NASDAQ: YHOO) shares. (Reuters)

Financial backers of Greece say they are concerned about whether a deal to lend the company more money will hold. (Reuters)

Economists concerned about the U.S. economy a few months ago change their opinions. (Reuters)

A fall off in investment bank activity hurts Barclays (NYSE: BCS) earnings. (Reuters)

China’s imports fall, raising demand concerns. (Reuters)

The new CEO of Sony (NYSE: SNE) will try to marry hardware and software for many of the firm’s products, just as he did with the PS3. (Reuters)

The head of Xstrata is under pressure to get a better deal for a Glencore merger. (Reuters)

A new settlement between banks and the government could help one million homeowners. (WSJ)

Google (NASDAQ: GOOG) to launch a home entertainment system as it moves into the hardware space as Apple (NASDAQ: AAPL) has. (WSJ)

An insider trading bill is broadly supported by Congress members. (WSJ)

Oracle (NASDAQ: ORCL) expands its use of web-based software products. (WSJ)

The FDA will speed the approval of biosimilar drug treatments. (WSJ)

An Alcatel-Lucent (NYSE: ALU) reorganization could cost 1,800 jobs. (WSJ)

Weekly unemployment benefits numbers improve steadily. (WSJ)

Greek unemployment rises to 20.9%. (WSJ)

The head of the European Central Bank pushes banks to take inexpensive loans to stabilize eurozone financials. (WSJ)

Canada will allow uranium exports to China. (WSJ)

A Hasbro (NASDAQ: HAS) and Zynga (NASDAQ: ZNGA) partnership to marry physical games with online ones. (WSJ)

Southern Co.’s (NYSE: SO) plan to build a reactor in Georgia receives NRC approval. (WSJ)

Apple’s market cap passes that of Google and Microsoft (NASDAQ: MSFT) combined. (WSJ)

New research suggests the education gap between rich and poor has widened. (NYT)

German officials are worried that the ECB has cut lending standards too much. (FT)

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Press Digest Tagged: AAPL, ALU, BCS, GOOG, HAS, MSFT, ORCL, SNE, SO, YHOO, ZYNG

Greek Debt & Austerity Deal, Cheered With a Thud (NBG, GREK, FXE, ALU, DB, STD)

Administrator — Thu, 09 Feb 2012 14:06:09 +0000

Reports are out that parties in Greece have finally agreed to a debt and austerity deal that will allow it to get its bailout funding and to remain part of the Euro. This is great news on the surface, but the market investors are not exactly climbing all over each other to load the boat on Greek trading. Maybe the moves to watch are in the Euro currency because the ADRs are just not really moving.

National Bank of Greece (NYSE: NBG) is up 1% on its ADR trading in New York to $3.96 this morning. Keep in mind that this has already more than doubled from the $1.64 low that was seen as recently as January 10, 2012. Not a year ago.. a month ago.

And the Greek stock market ETF, the Global X FTSE Greece 20 ETF (NYSE: GREK) has not even yet traded this morning and it has extremely thin volume even during the trading day. Shares closed Wednesday at $19.16 and its post-launch range has so far been $12.70 to $19.54.

The Rydex CurrencyShares Euro Currency (NYSE: FXE) is up by 0.15% at $132.21.

As far as other “pro-Euro” trading ADRs, we are only seeing mixed action on that front as well:

Alcatel-Lucent SA (NYSE: ALU) is up 1.5% at $1.98 but that may be after a Cisco earnings report (although Cisco is indicated lower).

Deutsche Bank AG (NYSE: DB) is trading up 1.2% at $46.82 in New York.

Banco Santander, S.A. (NYSE: STD) of Spain is trading down 0.5% at $8.71 in active pre-market trading.

Great news may finally be here, but the market has been expecting a deal or has at least been trying to come up with a fair market value around the issue of “Greece, or no Greece…”

As always, until a deal is signed this may be hearsay. Future politicians may also not choose to live up to the agreements. Sad, but possible.

JON C. OGG

Filed under: 24/7 Wall St. Wire, ADR, Currency, International Markets Tagged: ALU, DB, FXE, GREK, NBG, STD

360-Degree Cisco Earnings Preview (CSCO, ORCL, JNPR, ALU)

Administrator — Wed, 08 Feb 2012 17:44:37 +0000

Cisco Systems, Inc. (NASDAQ: CSCO) reports earnings after the close. Our guess is that Main Street is going to either really reward or really punish the stock. All companies in telecom and communications are on guard for this report. A poor earnings report from Oracle Corporation (NASDAQ: ORCL), a weak Juniper Networks, Inc. (NYSE: JNPR) and a dismal trading cycle in Alcatel-Lucent SA (NYSE: ALU) have Cisco investors nervous. If you just looked at the recent performance you would think that everything was going great in this turnaround and post-restructuring.

Lower compensation and SG&A may offset discounting in bundled product offerings as Cisco is seeking more and more of an enterprise’s total technology budget. Our fear is long-term lower margin compression after years and years of being technology’s envy in gross margin.

Cisco is down ahead of earnings but still just above this $20.00 mark against a 52-week trading range of $13.30 to $22.15. Analysts have a consensus target of $21.66, but we just saw one target on Tuesday morning from Credit Suisse at $26.00.

As far as expectations… Thomson Reuters has consensus estimates of $0.43 EPS and $11.23 billion in sales. For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues. For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues.

Cisco trades at an implied 11.4-times current year earnings estimates, and maybe even a tad less if you factor in the wasted billions used for share buybacks.

Chart analysis is not worth much here today in all honesty. Cisco is at a post-reorganization high and back over $20.00. The 50-day moving average is $18.92 if there is another blow-up, but here are the shorter moving averages… 5-day at $20.08, 10-day at $19.88, and the 20-day is at $19.71.

Options traders appear to only be pricing in a move of up to $0.60 or even a tad less using the monthly options which expire in a week and a half. For whatever this is worth, options traders are much more heavily involved in at-month Call options over Put options with at least a 2.5:1 ratio if you combine weekly and monthly trading volumes.

Cisco has pledged to raise its quarterly dividend of $0.06 ‘in time.’ It has now had four consecutive payments of that rate of $0.06 per share per quarter and that yield comes to only about 1.2% for new investors. Longer-term, that dividend needs to go over 2% if it wants to entice income-oriented investors. It is possible that we will get a dividend hike. If not this quarter, we expect one soon.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Earnings, Technology Companies Tagged: ALU, CSCO, JNPR, ORCL

All of Tech/Comm Bracing For Cisco Earnings… Dividend Too (CSCO, JNPR, ALU, ORCL)

Administrator — Tue, 07 Feb 2012 16:52:32 +0000

Cisco Systems, Inc. (NASDAQ: CSCO) is set to report earnings on Wednesday after the closing bell and all companies in telecom and communications will be watching handily. After a poor earnings report from Oracle Corporation (NASDAQ: ORCL) and after a lack of recovery from Juniper Networks, Inc. (NYSE: JNPR), the bar is set low even though expectations remain hopeful. Alcatel-Lucent SA (NYSE: ALU) remains under $2.00 per ADR due to its own failed turnaround.

And speaking of turnarounds, this is the second full report after the restructuring efforts have taken effect for Cisco. It is a leaner company and operating costs (at least compensation in SG&A) should be lower now. The problem is that Cisco has been wanting to win back much business and to lock out other competitors as it goes after every penny spend of the network (now including datacenters too). Translation: we just expect longer-term margin compression.

In this last leg of the rally, Cisco is back above $20.00 against a 52-week trading range of $13.30 to $22.15. Thomson Reuters has consensus estimates of $0.43 EPS and $11.23 billion in sales. For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues. For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues. In short, Cisco trades at an implied 11.4-times current year earnings estimates.

Cisco unfortunately wastes more money than it should buying back stock and that price level on the buyback plan is probably still just slightly above breakeven. Analysts have a consensus target of $21.66, but we just saw one target on Tuesday morning from Credit Suisse at $26.00. Chart and options trading analysis will be made in much more detail on Wednesday ahead of the report.

One last note… Cisco has pledged to raise its quarterly dividend of $0.06 ‘in time.’ It has now had four payments of that rate of $0.06 per share per quarter and that yield comes to only about 1.2% for new investors. Longer-term, that dividend needs to go over 2% if it wants to entice income-oriented investors. It is possible that we will get a dividend hike. If not this quarter, we expect one soon.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Dividend, Earnings, Technology Companies Tagged: ALU, CSCO, JNPR, ORCL

Top Analyst Upgrades & Downgrades (AVAV, AET, ALU, ANN, CAH, CMA, GLW, FDX, JAKK, M, PNC, PPO, RDS-A, SKX, TEVA, UA, WY)

Administrator — Mon, 06 Feb 2012 13:29:51 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Monday morning.

AeroVironment, Inc. (NASDAQ: AVAV) Raised to Buy at Goldman Sachs.
Aetna, Inc. (NYSE: AET) named Bull of the Day at Zacks.
Alcatel-Lucent S.A. (NYSE: ALU) Cut to Sell at S&P Equity Research.
Ann Inc. (NYSE: ANN) Cut to Underperform at Barclays.
Cardinal Health Inc. (NYSE: CAH) Reiterated Buy with $52 price target at Argus.
Comerica Inc. (NYSE: CMA) Raised to Outperform at RBC.
Corning Inc. (NYSE: GLW) Raised to Overweight at Piper Jaffray.
FedEx Corporation (NYSE: FDX) Raised to Buy at BofA/ML.
JAKKS Pacific, Inc. (NASDAQ: JAKK) named Bear of the Day at Zacks.
Macy’s Inc. (NYSE: M) named as value stock of the day at Zacks.
PNC Financial Services Group, Inc. (NYSE: PNC) Cut to Market Perform at BMO.
Polypore International Inc. (NYSE: PPO) Raised to Outperform at Baird.
Royal Dutch Shell (NYSE: RDS-A) Cut to Neutral at Credit Suisse.
Skechers U.S.A., Inc. (NYSE: SKX) Raised to Neutral at Stern Agee.
Teva Pharmaceutical Industries (NASDAQ: TEVA) Cut to Equal-weight at Morgan Stanley.
Under Armour Inc. (NYSE: UA) Reiterated Buy with $90 target at Argus.
Weyerhaeuser Company (NYSE: WY) Cut to Sell at UBS.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: AET, ALU, ANN, AVAV, CAH, CMA, FDX, GLW, JAKK, M, PNC, PPO, RDS-A, SKX, TEVA, UA, WY

Tracking The highly Unusual Short Interest Trends (ALU, BAC, DNDN, DMND, FSLR, F, GMCR, HGSI, LNKD, NFLX, RIMM, SIRI)

Administrator — Thu, 26 Jan 2012 15:08:32 +0000

Cult stocks and controversial stocks often have an unusually high short interest. What is amazing is that the bets against these companies sometimes go off the charts. We have tracked unusual short selling activity in shares of the following: Alcatel Lucent S.A. (NYSE: ALU); Bank of America Corporation (NYSE: BAC); Dendreon Corporation (NASDAQ: DNDN); Diamond Foods, Inc. (NASDAQ: DMND); First Solar, Inc. (NASDAQ: FSLR); Ford Motor Co. (NYSE: F); Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR); Human Genome Sciences, Inc. (NASDAQ: HGSI); LinkedIn Corporation (NYSE: LNKD); Netflix, Inc. (NASDAQ: NFLX); Research in Motion Limited (NASDAQ: RIMM); and Sirius XM Radio Inc. (NASDAQ: SIRI).

We covered the short interest changes for the January 13 settlement date and compared them to the December 30 short interest data and added in other color if applicable.

Alcatel Lucent S.A. (NYSE: ALU) rose to 22.54 million shares from over 18.2 million for a gain of almost 24%.

Bank of America (NYSE: BAC) rose 18.5% to 186.1 million from over 157 million at the end of December.

Dendreon Corporation (NASDAQ: DNDN) saw nearly a 6% gain to 34.76 million shares in the short interest to its highest level in a year.

Diamond Foods, Inc. (NASDAQ: DMND) saw a gain of 12% to 10.46 million shares during its time of accounting woes, but this is still not as large as in OCT/NOV-2011.

First Solar, Inc. (NASDAQ: FSLR) was down only marginally. The solar leader (and whipping boy) was down again to 18.04 million shares from a reading of 18.7 million at the end of 2011. Be advised that this was FIVE STRAIGHT lower readings in the short interest.

Ford Motor Co. (NYSE: F) was up by 14.7% to 147.1 million.

Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) remains a battleground stock and the uptick was less than 1% to 26.489 million shares in the short interest. That is still down about 10% from last year’s peak.

Human Genome Sciences, Inc. (NASDAQ: HGSI) posted another rise in the short interest to a new year record of over 32.2 million shares in the short interest. So much for loving the lupus drug.

LinkedIn Corporation (NYSE: LNKD) continues to see rising bets against its stock. The reading was 6.9 million shares short and that marks EIGHT STRAIGHT gains in the bets against the stock.

Netflix, Inc. (NASDAQ: NFLX) may feel after-the-fact now that earnings are out, but the short interest rose by a sharp 25% to 11.422 million shares. That is the highest short interest reading since last March. Today’s gains have to be some short covering.

Research in Motion Limited (NASDAQ: RIMM) has had the vultures circling it for some time but this last short interest reading of 36.6 million was down more than 3% and was actually the lowest short interest reading since the end of last July. Maybe all the short-sale money has been made since the stock fell about 75%.

Sirius XM Radio Inc. (NASDAQ: SIRI) always has a high short interest due to its low price and controversial stock… What is interesting is that the gain was not even 2% in short shares to 305 million BUT… That is the highest short interest since the end of last May.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Activist Investor, Cult Stock, Short Interest, Trading Alert Tagged: ALU, BAC, DMND, DNDN, F, FSLR, GMCR, HGSI, LNKD, NFLX, RIMM, SIRI

S&P European Downgrades Driving Home (EWQ, EWG, EWO, ALU)

Administrator — Fri, 13 Jan 2012 15:38:06 +0000

The rumors that Standard & Poor’s is set to downgrade certain European nations after the close is putting pressure on financial markets this Friday. Is it fitting that it is Friday the 13th? Reuters broke the news, but the report noted that Germany does not appear to be among the nations being downgraded. We recently gave our outlook on the nations in Europe most likely to be downgraded.

The DJIA is down about 1% and the iShares MSCI France Index Fund (NYSE: EWQ) ETF is down 2.8% at $19.19 today. Oddly enough, iShares MSCI Germany Index Fund (NYSE: EWG) is down 3.4% at $19.41 and it is not even supposed to be in the direct downgrade nations. Alcatel-Lucent S.A. (NYSE: ALU) is taking it on the chin the worst with a drop of 6.1% at $1.69.

What is being reported as a Reuters news break is as follows:

Breaking News: France TV channels say France rating downgraded by S&P, citing government source

What we would like to address is that this has been in the works in for quite some time. The Euro-zone debt crisis after the U.S. lost its Triple-A rating was the final straw.

Among other nations we see as downgrade candidates, these are Austria and Finland as the two most likely after France and Austria would be before Finland. iShares MSCI Austria Index Fund (NYSE: EWO) is down 1.4% at $14.03.

As far as Germany, Luxembourg, and the Netherlands, that is going to depend upon the brains over at S&P. So far it seems that Germany may avoid the downgrade.

JON C. OGG

Filed under: 24/7 Wall St. Wire, ADR, Bonds, Corporate Governance, Economy, International Markets, Rumors Tagged: ALU, EWG, EWO, EWQ

24/7 Wall St. Closing Bell (ALU, WBMD, URBN, RL, AWK, LEN, SVU, SHIP, LEDS, SNX, JASO, YRCW, CROX, HL, HRC)

Paul Ausick — Wed, 11 Jan 2012 21:05:20 +0000

Equities opened modestly down this morning and the three major indexes have stayed within a few points of flat all day. The NASDAQ composite has remained in positive territory as the technology sector has benefited from a sharp buying trend in solar stocks. The EIA’s weekly petroleum report came in with a crude build of 5 million barrels, way above an expected gain of 1 million barrels. The report weighed on energy stocks since mid-morning. The euro has also been weaker today, adding a bit of push to equity buying. Crude oil is ending the day down, with WTI crude down about -1.3% at $100.92/barrel and Brent crude is down 0.64% at $112.55/barrel. Gold closed higher, at $1,640.50/ounce, after posting a four-week high earlier today.

The unofficial closing bells put the DJIA down more than 13 points to 12,449.08 (-0.11%), the NASDAQ rose more than 8 points (0.31%) to 2,710.76, and the S&P 500 rose 0.03% or less than 1 point to 1,292.44.

There were several analyst upgrades and downgrades today, including Alcatel-Lucent, S.A. (NYSE: ALU) raised to ‘buy’ at Deutsche Bank; WebMD Health Corp. (NASDAQ: WBMD) cut to ‘market perform’ at Wells Fargo; Urban Outfitters Inc. (NASDAQ: URBN) cut to ‘sell’ at Citigroup; Ralph Lauren Corp. (NYSE: RL) cut to ‘market perform’ at Wells Fargo; and American Water Works Co. Inc. (NYSE: AWK) raised to ‘buy’ at Ladenburg Thalmann.

Earnings reports since markets closed yesterday have led to some price changes: Lennar Corp. (NYSE: LEN) is up 6.3% at $22.07 after posting a new 52-week high of $22.53 earlier today; Supervalu Inc. (NYSE: SVU) is down nearly -13% at $7.33; Seanergy Maritime Holdings Corp. (NASDAQ: SHIP) is up more than 5.5% at $2.65; SemiLEDS Corp. (NASDAQ: LEDS) is more than 5% at $3.69; and Synnex Corp. (NYSE: SNX) is up more than 8% at $34.80.

Other standouts from today include the following stocks:

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up more than 37% at $1.97. The Chinese solar maker is among several Chinese solar companies getting a boost today from news that solar panel prices appear to be stabilizing. We have more coverage here.

YRC Worldwide Inc. (NASDAQ: YRCW) is up nearly 16% at $11.38. The transportation company has said it will auction 62 of its surplus US sites.

Crocs Inc. (NASDAQ: CROX) is up more than 17% at $18.73. The funny-shoe company has estimated that sales in the current fiscal year will top $1 billion for the first time.

Hecla Mining Co. (NYSE: HL) is down about -22% at $4.55, after posting a new 52-week low of $4.25 earlier today. The silver miner has lowered its production estimate due to a forced closure of a shaft at its Nevada mine.

Hill-Rom Holdings Inc. (NYSE: HRC) is down nearly -12% at $30.45. The medical equipment maker and services provider lowered fourth-quarter and full-year guidance last night.

Stay tuned for Thursday. Here are the noteworthy events on the schedule (all times Eastern):

8:30 a.m. – Initial unemployment benefits claims report
8:30 a.m. – Census Bureau retail sales report
10:00 a.m. – Census Bureau business inventories report
10:30 a.m. – EIA weekly natural gas status report
1:00 p.m. – 30-year bond auction
2:00 p.m. – US Treasury budget
4:30 p.m. – Federal Reserve balance sheet

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: ALU, AWK, CROX, HL, HRC, JASO, LEDS, LEN, RL, SHIP, SNX, SVU, URBN, WBMD, YRCW